Question
Sundazzler Designs has prepared the annual manufacturing budget for its line of specialty pergolas. It estimated annual production of 3,000 pergolas during 2022. Each pergola
Sundazzler Designs has prepared the annual manufacturing budget for its line of specialty pergolas. It estimated annual production of 3,000 pergolas during 2022. Each pergola will require 54 pounds of lumber and one metal kit (which includes attachments and decorative embellishments.). The lumber used in these pergolas costs $1.50 per pound, and the metal kits cost $170 each. Each pergola will use two kinds of labor2 hours of type I labor from people who run the cutting saws and finishing tools, and 3 hours of work from type II workers who attach the metal reinforcements and other hardware. The type I employees are paid $15 per hour, and the type II are paid $12 per hour.
The Manufacturing Overhead budget is listed below:
Variable costs |
|
Indirect materials | $42,000 |
Manufacturing supplies | 58,800 |
Maintenance and utilities | 72,000 |
Total variable MOH: | 172,800 |
Fixed costs |
|
Supervision | 60,000 |
Insurance | 16,000 |
Depreciation | 132,000 |
Total fixed MOH: | 208,000 |
Total | $380,800 |
Requirement 1:
Prepare the annual manufacturing budget for 2022, assuming that 3,000 pergolas will be produced.
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